Google Ads offers several bid strategies that are tailored to different types of campaigns. However, every digital marketer faces the following questions – How much should we spend for an ad? How do we best adjust our budget? How do we optimize our bids?.
In this article, I will explain the various bidding strategies and how effectively you can use it to achieve your objectives.
Your Campaign Objective
The first step is to decide your campaign objective. Your bidding strategy various based on your goals. For example, if your campaign objective is to generate traffic to your website, then your focus should be on generating clicks. In that case, Cost per Click (CPC) should be right for you. Similarly, if you want to increase your brand awareness – not drive traffic to your site, it means that you need to focus on impressions. In that case, you could use cost per thousand viewable impressions (vCPM) bidding.
Various Bidding Strategies
Bidding Strategies can primarily be classified into two types: Automated and Manual. Automated bid strategies are automated processes that are designed to maximize your AdWords campaign goals. They are all portfolio bid strategies (previously called flexible bid strategies), which means that you can apply one strategy across all their campaigns, ad groups, and keywords.
Automated big strategies are recommended when you have a large and flexible budget. Google would make the optimization to your ads based on your previous campaigns. However, note that Automated Strategies are a black-box. The lack of transparency with automated bidding has a large consequence on your marketing efforts – you lose insight into who your ideal online audience is.
Smart Bidding
Smart Bidding is a set of automated bid strategies that uses machine learning to optimize for conversions or conversion value in each and every auction—a feature known as “auction-time bidding”. The strategies include:
- Target CPA (cost per acquisition)
- Target Return on ad spend (ROAS)
- Maximize Conversions
- Enhanced cost-per-click (CPC)
Target CPA (cost-per-acquisition)
Target CPA is used for conversions by targeting a specific cost-per-acquisition (CPA). Target CPA is the average amount you’d like to pay for a conversion.
If your key performance indicator is CPA, it’s effective if you have a static CPA target for all keywords within an ad group. If you have a large volume of keywords and historical data, then Target CPA is recommended for your campaign. Don’t forget to set up conversion tracking.
Setting bid limits for your Target CPA bid strategy isn’t recommended. It can prevent Google Ads from adjusting your bids to the amount that best meets your target CPA. They’ll be used in Search Network auctions only if you do set bid limits.
If it suspects the CPA target will be exceeded, then it will actively scale down your account volume. Don’t expect immediate results from your target CPA campaign. Especially for smaller accounts, the bidding strategies depends on quality and volume of data that you have. Thus, new campaigns would struggle to find success.
Target ROAS
Target ROAS is used for conversion by targeting a specific return-on-ad-spend (ROAS). Return on Ad Spend (ROAS) is the average value you receive in turn for every dollar you spend on your ads. The Target ROAS strategy focuses on driving the highest value of conversions, rather than the most amount of conversions. Just like Target CPA, you will need to set up conversion tracking and need historical data.
This is a great strategy when you know exactly how much you can afford to pay for a customer, but don’t have the time for daily optimizations. It may lead to overspending, but that’s what you’re giving up for not having to manage it.
Maximize Conversions
If you’ve got a large budget and want to automate your process with the goal of driving more conversions, then you are in the right place. Using historical data about your campaign and evaluating the contextual signals present at auction-time, Maximize conversions bidding automatically optimizes your CPC bid for your ad each time it’s eligible to appear. It optimizes for a higher volume of conversions, rather than the number of dollars your conversion is generating (total conversion value).
Enhanced cost-per-click (ECPC)
Enhanced CPC optimizes to drive the most conversions by increasing bids when the algorithm thinks there’s a higher chance for a conversion. It helps you get more conversions from manual bidding. It is available as an optional feature with Manual CPC bidding or as a portfolio bid strategy.
What’s the difference between ECPC and Target CPA? Well, with Target CPA, advertisers set a target per conversion, while ECPC attempts to drive the most conversions with a Max CPC ceiling. It works by automatically adjusting your manual bids for clicks that seem more or less likely to lead to a sale or conversion on your website. ECPC is constrained by your max CPC bids when optimizing for conversions whereas Target CPA automatically sets bids based on your target cost-per-conversion.
ECPC will increase your max CPC bid (after applying any bid adjustments you’ve set) when it sees a high likelihood of conversion. It will also lower your max CPC if it determines a conversion isn’t likely, so you’ll pay less for clicks that are less likely to convert.
Maximise Clicks
It’s an automated bid strategy that sets your bids to help get as many clicks as possible within your budget. It’s one of the best strategies if you want to drive traffic to your website. You just need to set a daily budget, and the Google Ads system automatically manages your bids to bring you the most clicks possible within your budget.
Manual CPC
It lets you manage your maximum CPC bids yourself. This strategy gives you total control over your maximum CPC, either by setting a default bid for a whole ad group or drilling down and applying separate bids for individual keywords If you’ve found that certain keywords or placements are more profitable, you can use manual bidding to allocate more of your advertising budget to those keywords or placements.
The main benefit of manual CPC is that you maintain absolute control over your bids. It becomes cumbersome when you have too many keywords to manage. Another issue with manual CPC is understanding when to alter bids, and by how much. Suppose your data shows a keyword is performing very well and you wish to increase bids to capitalize on this. But how would you know, by how much you should increase?
Target Search Page Location
This is an automated bid strategy that focuses on your impressions by increasing the chances of ad placements in the search results. It helps to get your ads to the top of the front page search results or solely on the front page.
Being in the top position in search results increases visibility, but before using this strategy, it’s better to do research to identify if a more successful ad position is the right fit for your campaign.
Target Outranking Share
It is an automated bid strategy that lets you choose a domain you want to outrank so that your ad is displayed above that domain’s ads, or shows when that domain’s ad does not. It allows advertisers to specify the competitors they want to outrank, and how many times they want to outrank them. Then AdWords will automatically adjust the advertiser’s bids accordingly. The following are some of the key elements in Target Outranking share:
- Benchmark Domain: the domain you want to compete against.
- Target Outranking Share: The percentage of auctions in which you’d like to bid directly against your competitor.
- Max. Bid Limit: The highest cost-per-click bid you’re willing to pay to outrank your competitor.
- Bid Automation: “Automated” lets the algorithm set and adjust your bids. “Manual” lets you enter your own bids.
- Low-Quality Keywords: This setting determines whether or not you want to outrank for low quality keywords.
Cost-per-thousand impressions (CPM)
A bidding strategy where you pay per one thousand views (impressions) on YouTube or Google Display Network.
Cost-per-thousand viewable impressions (vCPM)
This is a manual bidding strategy that helps you design campaigns aimed at increasing awareness, but not necessarily generate clicks or traffic. It lets you set the highest amount you want to pay for each 1,000 viewable ad impressions on the Google Display Network.
vCPM bidding probably isn’t for you if the goal of your campaign is a direct response from customers, like buying a product or filling out a form.
Cost-per-view (CPV)
Cost-per-view (CPV) bidding is the default way to set the amount you’ll pay for TrueView video ads in Google Ads. With CPV bidding, you’ll pay for video views or interactions (such as clicks on call-to-action overlays, cards, and companion banners). A view is counted when someone watches 30 seconds (or the duration if it’s shorter than 30 seconds) or interacts with the ad, whichever comes first.
The final amount you actually pay for a view is called the actual CPV. Actual CPV is often less than max CPV because you pay no more than what’s needed to rank higher than the advertiser immediately below you.
As mentioned at the beginning of this article, the right strategy depends on your campaign objective. It’s up to you decide the right strategy. I would recommend you to try out various strategies to optimize your ad delivery.
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